How to make sure the poor will always be with us

The existing poverty line could be improved by adding some income sources and subtracting some expenses (example: child care). Unfortunately, the administration’s proposal for a “supplemental poverty measure” in 2011 — to complement, not replace, the existing poverty line — goes beyond these changes. The new poverty number would compound public confusion. It also raises questions about whether the statistic is tailored to favor a political agenda.

The “supplemental measure” ties the poverty threshold to what the poorest third of Americans spend on food, housing, clothes and utilities. The actual threshold — not yet calculated — will almost certainly be higher than today’s poverty line. Moreover, the new definition has strange consequences. Suppose that all Americans doubled their incomes tomorrow, and suppose that their spending on food, clothing, housing and utilities also doubled. That would seem to signify less poverty — but not by the new poverty measure. It wouldn’t decline, because the poverty threshold would go up as spending went up. Many Americans would find this weird: People get richer but “poverty” stays stuck.
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The new indicator is a “propaganda device” to promote income redistribution by showing that poverty is stubborn or increasing, says the Heritage Foundation’s Robert Rector. He has a point. The Census Bureau has estimated statistics similar to the administration’s proposal. In 2008, the traditional poverty rate was 13.2 percent; estimates of the new statistic range up to 17 percent. The new poverty statistic exceeds the old, and the gap grows larger over time.